Recent years have seen large swings in house prices in many countries. Motivated by housing price variations, proposals for taxing capital gains on housing have repeatedly been put forth. The idea seems to be that such taxes would curb the redistribution occurring between those owning houses and those trying to get into the market for owner-occupied housing. Our paper shows that at least in simple settings, a tax on real capital gains on housing will only lead to even bigger price swings and will not be able to redistribute between people appearing on either side of the housing market.
Keywords: capital gains tax, housing market, price fluctuations
JEL-Classification: H23, H24, R 31.
Addresses:

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Europe has seen several proposals for tax coordination only in the area of capital income taxation, leaving countries free to adjust their labor taxes. The expectation is that higher
capital income tax revenues would cause countries to reduce their labor taxes. This paper shows that such changes in the mix of capital and labor taxes brought on by capital income tax coordination can potentially be welfare reducing. This reflects that in a non-cooperative equilibrium capital income taxes may be more distorting from an international perspective than are labor income taxes. Simulations with a simple model calibrated to EU public finance data suggest that countries indeed lower their labor taxes in response to higher coordinated capital income taxes. The overall welfare effects of capital income tax coordination, however, are estimated to remain positive.
JEL Classification: F20, H87

The relative demand for skills has increased considerably in many OECD countries
during recent decades. This development is potentially explained by capital-skill
complementarity and high growth rates of capital equipment. When production
functions are characterized by capital-skill complementarity, relative wages and employment
of skilled labor are countercyclical because capital equipment is a quasi-
fixed factor in the short run. The exact behavior of the two variables depends on
relative wage flexibility. Relative wages are rigid in Denmark, implying that the employment
share of skills should be countercyclical. The labor market is competitive
in the United States and therefore relative wages of skilled labor are expected to be
countercyclical. We find that the business cycle development of the two economies
is consistent with capital-skill complementarity.
Keywords: capital-skill complementarity, relative wages, business cycle

Boards are endogenously chosen institutions determined by observable
and unobservable firm characteristics. Empirical studies of large
publicly traded firms have successfully controlled for observable determinants of board size and shown a robust negative relationship between board size and firm performance. The evidence on smaller closely held firms is less clear; we argue that existing work has been incomplete in analyzing the causal relationship due to weak identification strategies. Using a rich data set of almost 6,000 small and medium-sized closely held corporations we provide a causal analysis of board size effects on firm performance using a novel instrument given by the number of children of the founders of the firms. First, we find no empirical evidence of adverse board size effects when the size of the board lies in the typical range for closely held corporations of three to six directors. Second, we find a significantly negative board size effect for the minority of closely held firms that are characterized by having comparatively large boards of seven or more members and non-complex operations.

The paper examines how country tax differences affect a multinational enterprise's choice to centralize or de-centralize its decision structure. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs – here, as a strategic pre-commitment device and a tax manipulation instrument –, we show that (de-)centralized decisions are more profitable when tax differentials are (small) large.
Keywords: Centralized vs. de-centralized decisions, taxes, MNEs.
JEL-Classification: H25, F23, L23.

The knowledge produced by academic scientists has been identified as a potential key driver of technological progress. Recent policies in Europe aim at increasing commercially orientated activities in academe. Based on a sample of German scientists across all fields of science we investigate the importance of academic patenting. Our findings suggest that academic involvement in patenting results in greater knowledge externalities, as academic patents appear to generate more forward citations. We also find that in the European context of changing research objectives and funding sources since the mid-90’s, the "importance” of academic patents declines over time. We show that academic entrants have patents of lower "quality” than academic incumbents but they did not cause the decline, since the relative importance of patents involving academics with an existing patenting history declined over time as well. Moreover, a preliminary evaluation of the effects of the abolishment of the "professor privilege” (the German counterpart of the U.S. Bayh-Dole Act) reveals that this legal disposition led to an acceleration of this apparent decline.

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We examine the interaction between commodity taxes and parallel imports in a simple two-country model with imperfect competition. While governments determine non-cooperatively their commodity tax rate, the volume of parallel imports is determined endogenously by the retailing sector. We compare the positive and normative implications of having commodity taxes based on destination or origin principle. Origin taxes are shown to have very attractive properties: they lead to lower levels of optimal taxes, they converge as parallel imports increase (while destination taxes diverge), and they lead to higher welfare levels.

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In the present paper a model of competition between sports clubs in a sports league is presented. Clubs are endowed with initial players but at a cost clubs are able to sell their initial players and buy new players. The results are that: if the quality of players is one-dimensional, then equilibria in pure strategies exist, and; if the quality of players is multi-dimensional, then there need not exist equilibria in pure strategies, but equilibria in mixed strategies exist. Equilibria in mixed strategies resemblance signings just before the transfer window closes in european soccer. competition between sports clubs, dimension of quality of players, equilibrium in pure strategies, equilibrium in mixed strategies.

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This study empirically investigates if competition’s impact on firm performance depends on the ownership structure. Our results show that an increase in import competition has a positive effect on firms with concentrated ownership and a negative effect on firms with dispersed ownership, regardless of the level of domestic competition. Given that the optimal level of ownership concentration with respect to firm productivity is high (low) if tariffs are low (high) in the case when import competition is high these results are consistent with theoretical findings that competition has positive effects in companies that are a priori efficient but not in unproductive firms. If tariffs are high, however, they support inferences based on the x-inefficiency literature. Contrary to what has been suggested by some theoretical results, the riskiness of a firm’s environment does not seem to influence our results.

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We briefly review the rationale behind technological alliances and provide a snapshot of
their role in global competition, especially insofar as it is based around intellectual capital.
They nicely illustrate the increased importance of horizontal agreements and thus
establish the relevance of the topic. We move on to discuss the organisation of industries
in a dynamic context and draw out consequences for competition policy. We conclude
with an outlook on the underlying tensions between technology alliances, competition
policy, and industrial policy.
JEL codes: L4, L5, O31
Keywords: Competition policy, innovation, alliances, industrial policy

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We show that the standard concertina result for tariff reforms – i.e. lowering
the highest tariff increases welfare – no longer holds in general if we allow for international capital mobility. The result can break down if the good whose tariff is lowered is not capital intensive. If the concertina reform lowers welfare it lowers market access as well, thereby compromising a second goal that is typically connected with trade liberalisation.
JEL-Classification: F11, F13, F15
Key words: Trade Policy Reform, International Factor Mobility, Welfare, Market
Access

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Abstract
We discuss the existence of a pooling equilibrium in a two-period model
of an insurance market with asymmetric information. We solve the model
numerically. We pay particular attention to the reasons for non-existence
in cases where no pooling equilibrium exists. In addition to the phenom-
enon of cream skimming emphasized in earlier literature, we here point
to the the importance of the opposite: dregs skimming, whereby high-risk
consumers are proÞtably detracted from the candidate pooling contract.

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We analyze delistings from European stock exchanges 1995-2005 as a function of market conditions, firm effects and governance regulation. We find that investor protection and corporate governance quality reduce the likelihood of going private, bankrupt or liquidated, but increase the likelihood of exit by merger or acquisition. Taking into consideration that corporate governance policy may be endogenously determined, the estimated policy effects turn out to be highly sensitive to model specification, but our best estimates produce qualitatively similar results. We conclude that the evidence is most consistent with efficient regulation: better protection of minority investors and higher corporate governance quality stimulates the market for corporate control (M&A) and reduces the incentive to go private. However, going private transactions have increased significantly while governance standards have been improved over the past decade, and we would not ignore the possibility that more regulation would lead to more delistings. For example, we find indications that the adoption of corporate governance codes and changes in the level of corporate governance indices increase the propensity to go private. It seems likely that increasing investor protection will at some point add more costs than benefits to companies and investors. Governments should therefore consider both costs and benefits of further regulation.
Key words: Delisting, public listing, mergers, acquisitions, bankruptcy, liquidation, going private, private equity, investor protection.